Meta Platforms Inc., the parent company behind Facebook, Instagram, WhatsApp, and Threads, is doubling down on artificial intelligence, even as Wall Street reacts with a jolt to the company’s swelling costs and uncertain legal headwinds. On October 29, 2025, Meta released its third-quarter results, revealing a dramatic increase in revenue and user growth, but also forecasting ballooning expenses in the years ahead—a move that sent its stock tumbling in after-hours trading.
The numbers themselves are eye-catching. Meta earned $2.71 billion, or $1.05 per share, in the July-September period of 2025, according to reporting from the Associated Press and The New York Times. That profit figure, however, was dragged down by a massive $15.9 billion income tax charge. If not for that one-time expense, the company said it would have earned $7.25 per share. Revenue for the quarter soared 26% to $51.42 billion, up from $40.59 billion a year earlier. Analysts surveyed by FactSet had anticipated $6.72 per share on $49.51 billion in revenue, so Meta beat expectations on both counts.
Behind those numbers is a user base that continues to swell. Meta’s daily active user base across its suite of apps reached 3.54 billion in September 2025, an 8% increase year-over-year. That’s a staggering figure by any measure—nearly half the planet checks in on a Meta-owned platform every day. The company’s workforce also grew 8% to 78,450 employees, reflecting its aggressive hiring, particularly in the AI sector.
But the real story—and the reason for the market’s jitters—lies in Meta’s spending spree. The company has been pouring tens of billions of dollars into data centers and AI research as it races to outpace Silicon Valley rivals. On Wednesday, Meta raised its capital expenditure forecast for 2025 to between $70 billion and $72 billion, up from a previous estimate of $66 billion to $72 billion, according to The New York Times. That’s a big leap from $28 billion spent in 2023 and $39 billion in 2024. And the company made it clear: the spending will only accelerate. "Capital expenditures will be notably larger in 2026 than 2025," Meta stated, with analysts forecasting next year’s expenses could reach as high as $97 billion—or even $100 billion, according to some estimates.
Why the surge? The answer is twofold: infrastructure and talent. Meta’s investments in data centers are meant to power its AI ambitions, which CEO Mark Zuckerberg has described as his top priority. "I’m very focused on establishing Meta as the leading, frontier AI lab," Zuckerberg said on an earnings call, as reported by The New York Times. Over a billion people now use Meta’s AI features each month, he added. The company has also been hiring top-tier AI experts at what some analysts call "eye-popping compensation levels." As Meta explained, "Employee compensation costs will be the second largest contributor to growth, as we recognize a full year of compensation for employees hired throughout 2025, particularly AI talent, and add technical talent in priority areas."
This hiring blitz has come with its own drama. In the past eight months, Meta has reorganized its AI division four times, shifting leadership from longtime executives to new hires. Just last week, the company laid off 600 employees from its AI division, targeting teams working on what insiders described as underperforming models. The company also quietly reduced its risk review team, in a move insiders said was designed to speed up AI product development.
Meta’s Reality Labs division, responsible for hardware like smart glasses, posted $470 million in revenue this quarter—up nearly 75% from a year ago, thanks largely to the Meta Ray-Ban Display glasses. But the division remains a money-loser, reporting a $4.4 billion loss, about the same as last year.
Despite the sky-high spending, the company’s core business—advertising—remains robust. Analysts like Debra Aho Williamson of Sonata Insights believe the investments are paying off. "For Meta, advertising is the foundation; AI is the growth engine," she told AP News. "There’s a lot of focus on Meta’s capital expenditures related to AI, which is completely warranted. The spending is absolutely massive. But with 26% growth in revenue in Q3, it’s clear that what Meta is doing to integrate AI into its ad products is working." Andrew Rocco, a stock strategist at Zacks Investment Research, echoed this optimism: "The quarter was not terrible, and forward statements continue to be positive. Most importantly, management confirmed that they expect ad revenue to remain strong."
Still, the market reacted with alarm to the prospect of even higher costs. Meta’s shares fell more than 7% in after-hours trading, dropping $57.67 to $694, after closing slightly up at $751.67. Some outlets, including The New York Times, reported an even steeper after-hours drop of more than 8%. The company’s forecast for the current quarter—revenue between $56 billion and $59 billion—was in line with analyst expectations, but the warning about 2026 expenses overshadowed the otherwise upbeat report.
Legal and regulatory issues are adding to the uncertainty. Meta warned that it faces "a slew of legal and regulatory issues in the US and the European Union that could hurt its bottom line." In the US, the company is bracing for several youth-related trials scheduled for 2026, which "may ultimately result in a material loss." Perhaps even more consequential, Meta faces an antitrust case that could force it to break off WhatsApp and Instagram—two platforms it acquired more than a decade ago and built into social media juggernauts. The outcome of that case, currently awaiting a judge’s decision, could reshape the company’s future.
In the meantime, Meta continues to roll out new AI products. In September, it unveiled the Meta Ray-Ban Display smart glasses and a video app called Vibes. But as analyst Andrew Rocco pointed out, "What everyone is looking at is the spend on AI and, importantly, how it’s going to impact Meta’s advertising business. Everything else is a sideshow." With AI now touching everything from ad targeting to content curation on Instagram Reels, the company’s future may well depend on whether its massive investments pay off in the long run.
As Meta barrels forward, spending at a pace that rivals even tech giants like Microsoft, the company finds itself at a crossroads. The promise of AI-driven growth is tantalizing, but the risks—soaring costs, regulatory threats, and market skepticism—are impossible to ignore. For now, Meta’s bet on the future is as bold as ever, and the world is watching to see if it pays off.
